3D Systems Corporation reported 1% growth for its second fiscal quarter 2017 and 2% growth for first half. While stocks were down on earnings miss, the overall performance reflects a relatively healthy business with projected revenues of over 650 million for the full year, in spite of significant challenges in the overall industrial 3D printing competitive scenario.
The poor financial performance – which still sees the stock gain close to 15% since the beginning of 2017 – is unfortunately a overly important metric in today’s industry, however it does not take into consideration the fact that 3D Systems is projected to sell as much as 650 million dollars in 3D printer hardware and 3D printing software and services. And that it’s business is healthy, with increasing R&D investments, in spite of increasing competition from large companies such as HP and Ricoh.
For the second quarter of 2017, the company reported revenue growth of 1% to $159.5 million compared to $158.1 million in the second quarter of the previous year. The company reported a second quarter GAAP loss of $0.08 per share compared to a loss of $0.04 per share in the prior year and non-GAAP earnings of $0.08 per share compared to non-GAAP earnings of $0.12 per share in the second quarter of 2016.
Demand from healthcare and industrial customers as well as strength in EMEA was offset by softer sales in APAC and lower revenue from professional printers.
“We are pleased with the growth in production printers, materials, software and healthcare,” commented Vyomesh Joshi (VJ), Chief Executive Officer, 3D Systems. “However, we have work to do in the second half of this year to improve our execution across the company and position ourselves well for long term success and profitable growth in 2018 and beyond.”
Gross profit margin for the second quarter of 2017 was 50.6% compared to 50.9% in the second quarter of 2016 as cost savings from manufacturing and supply chain improvements continue to support strategic investments and competitive pricing.
For the second quarter of 2017, operating expenses were $87.5 million compared to $84.1 million in the prior year. SG&A expenses decreased less than 1% to $63.1 million and R&D expenses increased 17% over the second quarter of 2016 to $24.4 million, primarily from investments in production solutions including Figure 4, metals and materials.
“We continue to make strategic investments in IT, go to market and innovation. For the remainder of the year, we will also increase our focus on costs, including operating expenses, in support of 2017 and long term,” commented John McMullen, Executive Vice President and Chief Financial Officer.
During the quarter, the company used $1.0 million of cash from operations and ended the quarter with $154.0 million of cash on hand.
For the first six months of 2017, revenue increased 2% to $315.9 million compared to $310.7 million in the first six months of 2016. The company reported a GAAP loss of $0.17 per share for the first six months of 2017 compared to a loss of $0.20 per share in the same period of the prior year and reported non-GAAP earnings of $0.14 per share in 2017 compared to non-GAAP earnings of $0.17 per share in the first six months of 2016.
“We are keenly focused on delivering production solutions that provide durability, repeatability, productivity and leadership in total cost of operations. We believe our investments, innovation and improved execution will position us well for the long term and enable us to drive the transition in 3D printing from prototyping to production,” concluded Joshi.
Revised Full Year 2017 Guidance
Based on the results and plans for the remainder of the year, management revised full year 2017 guidance. For the full year 2017, management expects revenue growth of 2% to 6% resulting in a revenue range of $643 million to $671 million. Management expects GAAP earnings per share to be a loss of approximately 14 cents per share in 2017 compared to a loss of 35 cents per share in 2016. Management expects non-GAAP earnings per share to be approximately flat for the full year 2017 compared to non-GAAP earnings of 46 cents per share for the full year 2016. Additionally, management expects to generate positive cash flow from operations for the full year 2017.